What is the name of your state? Texas
My mother died 4 months ago and left seven tax deferred accounts plus other assets to me and my 2 siblings. Three are annuity contracts inside an IRA acct, one is annuity inside a non-qual acct, the remaining three are traditional IRA w/ misc investments. None of the annuities are annuitized yet. I originally wanted to disclaim some or all of the tax deferred accounts and let them pass through to my children so they could pay the taxes at their low tax rate instead of my high rate.
I'm not sure about the IRA's yet but on the Annuity contracts, if I disclaim them my portion gets split by my siblings instead of passing through to my heirs. My idea, that my siblings are agreeable to, is for all three of us to disclaim the annuities (and maybe the IRA's also) and (according to the ins. co. specialist) the account would then go to the 'Estate'. The will simply divides the estate three ways, share and share alike, so we are effectively ending up back where we started except the estate would be responsible for the taxes rather than the beneficiaries. Assuming that the estate would have a lower tax rate than the beneficiaries, we then save some taxes. We would let the estate draw from the annuities over 5 years to help keep the rate down. Total estate including tax deferred accounts is less than $900k, and tax deferred accounts total about $250k. One sibling at low tax rate now, me and other sibling at high rate.
Several questions arise from this scenario. How are estates taxed on income to the estate, like annuity/IRA payments, investment income etc.? Is it the same tax rate table as for individuals, or a different higher rate. Can we all disclaim to the annuities and then effectively receive the same monies from the estate? On the Traditional IRA's, does disclaimed portion pass through to heirs, or split among other Primary Beneficiaries like the annuities? Or is this a company by company contract issue? Any problems with my scenario and is it going to bite me?
Thanks, Joe
My mother died 4 months ago and left seven tax deferred accounts plus other assets to me and my 2 siblings. Three are annuity contracts inside an IRA acct, one is annuity inside a non-qual acct, the remaining three are traditional IRA w/ misc investments. None of the annuities are annuitized yet. I originally wanted to disclaim some or all of the tax deferred accounts and let them pass through to my children so they could pay the taxes at their low tax rate instead of my high rate.
I'm not sure about the IRA's yet but on the Annuity contracts, if I disclaim them my portion gets split by my siblings instead of passing through to my heirs. My idea, that my siblings are agreeable to, is for all three of us to disclaim the annuities (and maybe the IRA's also) and (according to the ins. co. specialist) the account would then go to the 'Estate'. The will simply divides the estate three ways, share and share alike, so we are effectively ending up back where we started except the estate would be responsible for the taxes rather than the beneficiaries. Assuming that the estate would have a lower tax rate than the beneficiaries, we then save some taxes. We would let the estate draw from the annuities over 5 years to help keep the rate down. Total estate including tax deferred accounts is less than $900k, and tax deferred accounts total about $250k. One sibling at low tax rate now, me and other sibling at high rate.
Several questions arise from this scenario. How are estates taxed on income to the estate, like annuity/IRA payments, investment income etc.? Is it the same tax rate table as for individuals, or a different higher rate. Can we all disclaim to the annuities and then effectively receive the same monies from the estate? On the Traditional IRA's, does disclaimed portion pass through to heirs, or split among other Primary Beneficiaries like the annuities? Or is this a company by company contract issue? Any problems with my scenario and is it going to bite me?
Thanks, Joe